Sunday, August 3, 2014

A taste of freedom or an illusion?

Freedom is what we all want. Kids want to have to freedom to go out without their parents controlling. I remembered when I was younger, I wanted to grow up so badly so that I have the freedom to do what I want and best of all no more home work! (I hated studying). I wanted to start working and earn my own money.

After graduating with a diploma from polytechnic,  I went on to National Service which essentially took away my freedom again. People who went through the army will know the regimentation involved and more often than not, we have to do the things we do not want or do not like such as being scolded because someone else made a mistake, wake up early everyday, march around the parade square aimlessly and a lot more other regimentations. Thinking back, all these discipline and regimentation does have its benefits. Apart from the experiences which I'll never forget, it made me a better person with dreams and determination to persevere no matter what.

Discipline before freedom

This leads me to the point that before freedom can come, discipline has to come in first. Your parents will let you have more freedom if they know you're disciplined enough to handle your own affairs as you grow up. You get freedom in the form of graduation after you have the discipline to study and pass your exams. You get financial freedom after you have the discipline to plan your finances in the right way.

Let me repeat again. You only get financial freedom after going through a process of discipline. This includes the discipline to save money, to spend wisely, the discipline to acquire knowledge of investing and financial planning and how about the discipline to earn money?

I've just finished my last paper for my entire degree course yesterday and it was a taste of freedom. After years of studying, rushing from work to school(sometimes skipping dinner), balancing time between work, studying, social life, I've finally endured through it all. The satisfaction of finishing something after going through the tough times made it seems even more worthwhile.

What is financial freedom?

For those who do not know what is financial freedom, let me explain it briefly. Financial freedom is the ability to stop working and still able to sustain your current or desired lifestyle. It is the state where you don't have to worry about having not enough money any more.

Beware of illusionary freedom

So many of us think that once we grow up and start working, we already have the freedom. What is this freedom? Freedom to spend your own money without having to rely on your parents? Freedom to buy the things you like? This is what I call illusionary freedom.

Do you see the illusion of it spinning?

I remembered when i had a taste of working for the first time at the age of 16, the feeling was magical. Even before i had received my salary, i started spending thinking that the money will come later. I could now buy the things i want without relying on my parents. When i got my pay check, i felt rich and had the freedom to spend it in whatever way i deem fit. After all, this was my hard earned money and nobody can say anything right? At that time, camera hand phones were getting more popular and i got one for myself at $300 plus. This was a freedom to spend but i did not think that if i saved it up, it would be useful for me in the future.

This illusionary freedom could be even worse with the easy money out there. Credit cards and money lenders make it much easier for us to spend more than we earn. Those who followed me on Facebook would know that i shared an article by inSing of a Singaporean professional in his 30s who got himself deep into debt. He's currently forking out $4000 every month just to pay interest on the loan he borrowed. The original loan amount was only $20,000 and he has already paid $70,000 in interest.

What's the cause of all these? You'll know by the words which he said which i quote below:

“My family has never been well-off, he said, "so when I started my first job and earned a proper salary, I suddenly felt like I was awash with cash. I started splurging.”  
“The banks kept on sending me invitations to sign up for credit cards, and at one point, I was using 10 different credit cards. I lost track of my spending,” he said.
Read the full article here

Discipline yourself for financial freedom

Now, i'm not saying you save all your money and not spend at all. It's ok to splurge once in awhile but splurge in a controlled manner. Planning your financial goals is the key. You can refer to my financial goals page for an example of the financial goals that i set for myself. This gives me an idea of how much i need to save for retirement and i work towards that target.

When i find that i can no longer reduce my expenses to meet my targets, the only way will be to increase income. However, increasing income doesn't come easy and it takes time and effort to build up another stream of income. Even if you want to get a promotion in your job, it also requires effort to excel in your job and still the promotion is not guaranteed. In a sense, reducing expenses is much easier.

Discipline to build up an investment portfolio and create passive income will lead to financial freedom. But to do that, having a substantial savings first is important. This is what i always tell my readers who email me and ask on how should they start investing.  The truth is if you have $10,000, a 10% yield is only $1000 but if you have $100,000, then the same 10% yield is $10,000. There is no short-cut to the process of discipline in saving money.

Without the discipline on financial matters, it will lead to undesired consequences. Read related posts below for more stories.

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Related Posts:
1. 35 and totally broke or $100K savings by age 30?
2. Dream $110k wedding ends in debt
3. A generation of instant gratification - The cause of unhappiness
4. $1 Million gone in one year


  1. Hi SGYI,

    Congratulations on wrapping up your last paper! All the best and hope you graduate with stellar results. =)

    Besides discipline, a good dose of motivation would help one to achieve the goals set. These two traits often reinforce one another and success in a field (eg. personal finance) can often be replicated in another (i.e. fitness, diet) with good results.

    1. Hi 15HWW,

      Thank you for your well wishes. At last finally I can breath some fresh air. :)

      Oh yes motivation is important. Passion as well. But to think of it, how many people actually has the passion for retirement planning? Motivation sometimes do not last which is where passion comes in. However, people who do not have passion for it will require discipline and a good habit which needs to be built up over the years.

  2. Hi SGYI


    After working in the society for awhile . I think this : " Hard work is important , Luck is more important . "

    What do you think ?

    1. Hi Small Time Investor,

      Hmm, I say relationship is important. Especially with your boss. Its still humans interacting with humans.

  3. Congrats SGYI on the degree freedom.

    Now the target to the next freedom will be the next one ;)

    1. Hi B,

      Thank you for your well wishes too. Yes, the next financial freedom will be the target. Looking forward to it. Let's achieve it together. :)

  4. Same like those wishing for early retirement and freedom from boring jobs.

    One ex-colleague told me his enjoyment on retirement life's freedom lasted less than one year. Too boring with so much free time!

    Now he is working past time in SMRT as one of those uncles at SMRT station giving out hand signals

    1. Important to have other things to do even if stop working. Best is you enjoy your job and don't ever need to retire.

  5. Congratulation! I always thought studying and working at the same time is tough. So I have always respect people like you. Furthermore, you are able to contribute to the personal finance community in spite of your studies and work. Impressive.

    Look forward to more wealth building articles from you!

    SG Wealth Builder

    1. Hi Gerald,

      Thank you so much for your compliments and encouragement. I've learnt so much over the past one year especially when I start blogging. Glad to know many other like minded bloggers like you in this community.

      There're surely many more things that needs to be done. This is just the beginning.